What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; total wages up strongly as workforce swells; ANZ card data weak, bird flu risk gets closer, swaps on move, NZD stable, & more

10th Jun 24, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE/LOAN RATE CHANGES
No changes to report today. But this interest rate strategy note might be useful.

TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either.

EMPLOYMENT RISES
Total gross earnings for the March 2024 year rose by +8.6% (+$13.8 bln) compared with the previous year, according to data released by Stats NZ today. The total gross earnings for the March 2024 year reached $174 bln, up from $160 bln in the year prior. A swelling workforce is boosting these levels. Compared to Q4-2023, the March 2024 quarter there were +7346 more jobs, up +0.3% on a s.a. basis, taking the total to 2.3 mln filled jobs, +45,800 more than a year ago. (But don't forget that a net of +111,100 immigrants arrived here in that time, net of those leaving. And the labour force rose by +69,100 in the same year.)

NOW UP LESS THAN +3% PA
The annual increase in supplier costs to supermarket continues to moderate says Infometrics, but the pace of that moderation has slowed in recent months. So they are levelling out at the much higher level. Their Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) shows an average +2.9% increase in what suppliers charged Foodstuffs supermarkets for goods in May 2024 compared to a year earlier. That is down from the peak of a +10.6% increase in December 2022, and a small easing of the increasing rate of +3.2% in the year to March 2024.

MANY MARKETS CLOSED
It is a public holiday in Australia today (King's Birthday), and that will be affecting market volumes in this part of the world. Financial markets are also closed in Shanghai and Hong Kong for their Dragon Boat festivals. Markets are open in Singapore however

MAKING SENSE OF BUDGET 2024
We have released our summary of the Education Budget here as part of our overall summaries here and here. More of our summaries are to follow. The Treasury has also released their visualisation of the Budget 2024 which you can find here.

MILESTONE
Kernel Wealth has hit $1 billion in funds under management, and says it is targeting $6 bln by 2028.

SAGGING IN MAY
ANZ said its card activity data shows annual growth was just +2.3% in May from a year ago, despite inflation running at a considerably higher pace. Spending on durables, discretionary spending categories and clothing continue to lag they say. And now the impetus from tourism-related spending has turned into a drag on growth. The one area still expanding is "financial services".

STAYING FRESH
For the many readers who use our NZX50 resources, please note that recent updates to the profiles have been made for Fisher & Paykel Healthcare (FPH), Goodman Property Trust (GMT), Kiwi Property Group (KPG), Arvida Group (ARV), Stride Property Group (SPG), and Serko (SKO).

BIRD FLU RISK GETS REAL & CLOSE
In Australia, major supermarket Coles has imposed limits of how many eggs customers can buy after hundreds of thousands of chickens have been destroyed after bird flu was found at five large poultry farms. Prices are likely reflect these shortages.

SWAP RATES DIVERGE
Wholesale swap rates are likely to be little-changed yet again today at the short end, 2 years and less. But they probably got a kick along at the longer end on international pressures. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.62%, a level it has hovered around for almost 90 days. The Australian 10 year bond yield is up +10 bps from Friday at 4.33%. The China 10 year bond rate is unchanged at 2.32%. The NZ Government 10 year bond rate is up +9 bps at 4.78% from Friday and the earlier RBNZ fix was at 4.70% and up +6 bps from Friday. The UST 10yr yield is marginally firmer from this morning, up +2 bps at 4.45%. Their 2yr is now at 4.89%, so the curve is little-changed at -44 bps inverted.

EQUITIES MIXED BUT LIGHT
The NZX50 is down -0.6% in late and shallow trade today. The ASX is closed for its KB holiday. Tokyo has opened its Monday trading up +0.5%. Hong Kong and Shanghai are also closed for a holiday. Singapore is down -0.2% in early trade there. The S&P500 futures trade suggests Wall Street will open virtually unchanged tomorrow.

OIL FIRMISH
The oil price is +50 USc higher from this morning, now just on US$75.50/bbl in the US, but unchanged at US$79.50/bbl for the international Brent price.

GOLD LITTLE-CHANGED
In early Asian trade, gold is little-changed, up just +US$4 from this morning at just over US$2297/oz.

NZD HOLDS
The Kiwi dollar is little-changed this morning, still at 61 USc. Against the Aussie we are down marginally at just over 92.9 AUc. Against the euro we are marginally firmer at 56.7 euro cents. This all means the TWI-5 is still just on 70.6.

BITCOIN ON HOLD
The bitcoin price is little-changed again today, now at US$69,766 and up a minor +0.2% this morning's open. Volatility of the past 24 hours has been very low at just under +/- 0.5%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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65 Comments

by huttman | 10th Jun 24, 4:15pm 1717992930

For the many readers who use our NZX50 resources, please note that recent updates to the profiles

how often are those profiles updated?

by J.C. | 10th Jun 24, 4:31pm 1717993898

USD continues to lose share of global reserves to gold. A major mean reversion trade is still in an early innings.

2014: USD share of global reserves = 59%; gold share of global reserves = 10%

2023: USD share of global reserves = 49%; gold share of global reserves = 19%

Now, here's some interesting insight. RUBJPY (that's Russian rube) ratio is 1.75. This is the same as in Jan 2015 and well correlated.

Russia and Japan have converged in GDP PPP. Both have to dedollarize: Russia due to sanctions, Japan to support currency due to debt.

A test of G7 vs BRICS.

https://www.gainesvillecoins.com/blog/gold-overtakes-euro-in-global-int…

by J.C. | 10th Jun 24, 4:23pm 1717993396

The pronounced shift from USTs to gold began in 2014 [my benchmark date for start of a gold bull market]. This has accelerated after the US communicated in March 2022 that USTs are only risk free if you accept the geopolitical policies of the US.

Audaxes will understand this.

by IT GUY | 10th Jun 24, 4:42pm 1717994544

That's the big mac rules based order thing.......

Our toys and our sandpit or piss off....

by J.C. | 10th Jun 24, 4:49pm 1717994984

The problem is the weak yen. I believe Bad Gurl Yellen stopped the rate hike Kabuki theatre performance. It is time to get down to the business of preserving the Pax Americana-led global financial system. If the yen isn’t strengthened, the big bad pinko commie Chinamen will unleash the dragon of a devalued yuan to match their chief export competitor Japan’s super-duper cheap yen. In the process, US Treasuries will get sold, and that will be game, set, and match for Pax Americana if it occurs.

- Arthur Hayes, co-founder and former CEO of cryptocurrency exchange BitMEX

by Pa1nter | 10th Jun 24, 4:25pm 1717993544

What does the debt side look like? Debt growing at a greater rate than reserves.

by J.C. | 10th Jun 24, 4:38pm 1717994326

Approx doubled since 2014.

https://fred.stlouisfed.org/series/TREAST

by Pa1nter | 10th Jun 24, 9:12pm 1718010768

So it's a bit Greshams law again.

Overall demand for USD is up, but mostly in debt not reserves. This is partially because you won't spend gold when you can spend a lesser money, like US dollars.

by Eschaton | 10th Jun 24, 6:34pm 1718001275

How do you know how much gold exists...?

by IT GUY | 10th Jun 24, 4:40pm 1717994444

This will run

Ōtaki MP Tim Costley, who lives just 58km from Parliament, is claiming a $36,400 housing allowance for a Wellington apartment that he owns.

hard to get good tenants now

by J.C. | 10th Jun 24, 4:53pm 1717995195

The grifting has to stop. If the cost of commuting (or commuting + hotel / motel) is lower, then no accommodation grant.

by IT GUY | 10th Jun 24, 5:11pm 1717996262

Some people call it an allowance, others an entitlement, and some just grift.

Great way to cover the mortgage if you can swing it....

by kiwikidsnz | 10th Jun 24, 5:19pm 1717996784

It's not hard to believe that another National MP could be that tone deaf, the surprising thing is that Luxon hasn't dealt with them after his own issue a couple of months ago.

IIRC at the time there was a published list of ~20 Opposition MPs using similar entitlements (including W. Jackson): nothing mentioned further in the MSM since of course.

by IT GUY | 10th Jun 24, 5:27pm 1717997240

ask willie jackson how much he took.....

by JimboJones | 10th Jun 24, 5:25pm 1717997142

I'm not sure I see the issue...

by J.C. | 10th Jun 24, 5:55pm 1717998959

I do. Using public funds for personal benefit should be snuffed out. It breeds and supports a culture of entitlement.

by JimboJones | 10th Jun 24, 6:01pm 1717999299

So every MP should come from Wellington or pay their own way to get there each day?

by J.C. | 10th Jun 24, 6:19pm 1718000391

Do you have reading comprehension difficulties?

by kiwikidsnz | 10th Jun 24, 6:23pm 1718000634

Only when it suits his agenda

by kiwikidsnz | 10th Jun 24, 6:23pm 1718000592

In the 19th century the rural squattocracy provided MPs who could afford to support themselves when Parliament was sitting. Payment for MP was changed in the late 19th century to reflect the need "sufficient to enable working men to consider standing for Parliament, replaced the honorarium from 1892"

"Parliament's hours were changed in 1929 to recognise the travel difficulties MPs faced. To let politicians get away for the weekend, the House sat on Friday mornings. Flying grew more popular after the war, but some older MPs who were not keen to take their chances in the air still took the train or ferry. Regular air travel eventually changed sessions by enabling MPs to go home each week or return to Wellington during the recess."

So, the massive increase in MPs incomes & entitlement rorts since is simply icing on the cake.

https://nzhistory.govt.nz/politics/parliaments-people/pay-and-travel&nb…;

by TronMVP | 10th Jun 24, 9:55pm 1718013341

Yes, he should stay in a hotel instead. That would be $300 five nights per week, let's say 50 weeks per year, that comes to around $75,000 per year on the taxpayer.

Or maybe commute. That's 116km per day, which is 580km per week, for 50 weeks makes it around 29,000km per year, paid at $1 per km, gives us $29,000 per year. Yes, make him drive, and save the taxpayer $5,000 per year.

by pigeonbox | 10th Jun 24, 11:56pm 1718020585

Parliament sits for 30 weeks a year, and around 90 days total within those.

by the Joneses | 11th Jun 24, 5:15am 1718039711

I think there is a conflict of interest in paying an MP to rent their own house. Have them rent someone else's house instead.

by IT GUY | 10th Jun 24, 4:41pm 1717994514

Chinese Premier Li Qiang visits New Zealand.

Pressure will come on NZ re not joining AUKUS

by Foxglove. | 10th Jun 24, 4:53pm 1717995185

Perhaps, perhaps not. Foreign Minister Winston has been in the kitchen long enough by now to know how to operate a pressure cooker. Be interesting though to observe the level of both political & public protest that might be organised concerning known human rights violations, threats to the security of Taiwan and more topically the massive emissions, coal burning pollution mostly, that China produces. In which case will be of interest too, as to what sort of security measures are provided.

by IT GUY | 10th Jun 24, 5:02pm 1717995777

I think its more theater about influence in the pacific... China has vast amounts of money it can use to buy influence or votes etc.

There is no way in hell they have the ability to project power towards NZ without having to cross people who will grind them to a halt. Secondly any war would be won or lost in the Indian ocean not the southern china sea.

Cut off china from this supply route and its game over .....

We need to stay friends with China until they do something dumb... then we have no choice but to team up with Aussie and USA.

by Foxglove. | 10th Jun 24, 5:27pm 1717997244

The great fleets used by the Allies for Pacific Island invasions will be impossible today certainly. The danger though conceptually, is what Japan resorted to in a relatively minor form, with submarines in attacks on say Sydney harbour and the west coast of the USA. China is developing nuclear powered long range deep water subs with nuclear strike capability. Four nuke missiles of todays potency would virtually do NZ in. That is why Australia is enlisting the same and probably, Japan soon too. The USA & western allies can muster over 100 of these vessels. That sits as a very big deterrence in terms of counterstrikes.

by IT GUY | 10th Jun 24, 5:31pm 1717997483

The Ukraine has proven that nuclear does not stop conventional attack

by Foxglove. | 10th Jun 24, 5:54pm 1717998896

In a broad sense you are correct and it harks back to what in history, particularly post Napoleon, was described as the balance of power. Hence the race for naval superiority between Britain and Germany prior to WW1 and the treaties after that to restrict another one emerging. That in itself in reality, is an example of deterrence and it gave the impetus of course to the nuclear arms race.There is little to physically stop a nuclear submarine, without even surfacing, 300kms off NZ’s or any other nations coast letting loose precision guided missiles. What prevents that largely is the fact that like retaliation will soon follow. I am sane enough to be scared senseless by the thought of any more global conflicts but the point is if Mr Putin was not aware of the counterattack consequences he may have seen fit to go nuclear by now. There is another danger too unfortunately. Remember another dictator in 1945 who tipped into insanity and would have been happy to see the world go down with him and just imagine that today with a red button at the fingertips.

by kiwichas | 10th Jun 24, 5:56pm 1717998962

So you don't think Winston should ask the Premier if they should desist from buying oil etc from a certain M Putin, who is responsible for possibly 250000 soldiers murdering each other, and civilians, and property destruction pollution, radicalization and polarization; hatred that will last for generations xc xc.??

Should not ask M Putin to stop interfering in Ukraine's internal affairs, as well as the rest of Europe?

by Foxglove. | 10th Jun 24, 6:28pm 1718000922

Russia and China have signed an accord. It is hardly unusual. For example back in 1939 there was the Molotov and Ribbentrop treaty, or if you like, The Non Aggression Pact. The signatories will take it seriously enough, so long as it may suit and are not likely to be receptive to small nations at the south east end of the line telling them to break it. That is the reality, like it or lump it.

by kiwichas | 10th Jun 24, 6:37pm 1718001431

Don't think Putin likes being reminded of the Nazi-Soviet Pact, some try to say it was a defensive thing and OK, they who were buried in Katyn would disagree if they could, along with 60000000 others.

by Foxglove. | 10th Jun 24, 7:27pm 1718004461

Well said. And of course the Soviets made hay while the sun shone supplying the Nazi war machine and facilitating rail freight from the east, with raw material, energy all that could be had and don’t forget, acquiring half of Poland without firing a shot.Until that is 1941, Operation Barbarossa, the Germans happily commenced firing it all back. Only in Russia, its great systems of great suppression, could Stalin have survived that stark level of foolhardiness and that same element is what Putin is surviving on so far.

by Audaxes | 10th Jun 24, 8:17pm 1718007465

Obama’s Guilt for Ukraine’s War

by kiwikidsnz | 10th Jun 24, 5:05pm 1717995903

NZs tall poppy syndrome pot gets another stir

https://www.newshub.co.nz/home/money/2024/06/aotearoa-s-rich-list-shows…

by redcows1 | 10th Jun 24, 5:14pm 1717996481

Seemed pretty subdued comments to my mind, would have expected much more of an attack.

"So that's when I said 'yep, it's okay for people to do well, but I think there are some signs here that some things have got a bit out of balance in our society as well"

by kiwikidsnz | 10th Jun 24, 5:22pm 1717996942

Things would be more balanced if more people got off their couches, took their own personal risks & created multinational multibillion $ businesses.

by M0ralHazard | 10th Jun 24, 7:36pm 1718005000

I'm sometimes not sure if you are a satire account

by Pa1nter | 10th Jun 24, 8:22pm 1718007765

Kinda true though.

Much of the complaints are about the government doing something to make companies more productive so they can pay their workers more.

There's a much quicker, easier track for someone to have productivity improve their income - make more productive use of your time.

by tis i | 11th Jun 24, 6:44am 1718045098

I could be a hell of a lot more productive if the government just got out of the way.

Its amusing that people want to double down on the very thing that kills productivity.

by kiwikidsnz | 10th Jun 24, 8:26pm 1718007975

Sometimes I'm not sure either. There's so much material to work with.

by IT GUY | 10th Jun 24, 5:39pm 1717997965

Hearing that on the North Shore, Auckland, a few roofing companies are in very big trouble.....

I think the interest rate cuts are closer then we think, but will only occur once the carnage is all too real

by JimboJones | 10th Jun 24, 6:02pm 1717999356

Good time to get a new roof then

by IT GUY | 10th Jun 24, 6:28pm 1718000908

Not if you have to pay a deposit

by solardb | 10th Jun 24, 7:55pm 1718006136

Good time to build state houses, and infrastructure.

by Pa1nter | 10th Jun 24, 8:23pm 1718007824

If only you could start massive public projects immediately once the building sector gets quiet.

by HouseMouse | 10th Jun 24, 8:34pm 1718008492

Anyone who knows anything about residential construction could have seen this coming 2 years ago. Apart from the government. I was telling them they needed to gear up, rather than gear down ( which they started doing 18 months ago)

by Pa1nter | 10th Jun 24, 9:04pm 1718010257

Few issues:

- An overall slowdown was obvious, but as we're all finding out from so many, many inaccurate predictions around the timing and magnitude (so far), accurately lining up the timing is quite the thing.

- Much of the industry is really only getting back to "normal" operating conditions, in terms of supply and workload.

- ongoing natural disasters means some parts of the sector have such ongoing demand they're not getting much more available (or cheaper). And are likely going to be busy going into the future also. And they're not compatible with the parts of the sector that are getting quiet, bricklayers and tilers don't port over to civil infrastructure.

- as much as some people don't want to see, the approach to public construction needs a serious overhaul if it wants to deliver value. The existing figures don't stack up. And it's a big beast to stop, modify and redeploy.

by HouseMouse | 10th Jun 24, 10:14pm 1718014493

100% agree on that last point. But that’s been obvious for many years.

by Pa1nter | 10th Jun 24, 10:28pm 1718015296

Well, the old guys were unlikely to clearly see, and then act on their own hubris, and the new ones have been there for what, 6 months, and aren't really fans of increasing capital investments at the moment.

by Zwifter | 10th Jun 24, 6:19pm 1718000387

New Zealand business have zero stamina. All it takes is a month or two of poor results and they fold. Interest rate cuts are coming in August.

by Pa1nter | 10th Jun 24, 8:25pm 1718007902

Many of them have been operating at reduced incomes (or a loss) for 4 years.

They're folding now, because their work is drying up and thus their ability to make up for the 4 years.

by DIYman | 10th Jun 24, 6:25pm 1718000756

The roofer is early in the building process, electricians and plumbers follow, then gib placers, plasters and painters, kitchens and bathrooms and floor coverings, driveways and landscaping Roofers have been struggling since Christmas, I dont think there is any such thing as a canary in the coal mine for building, but one by one, expect the chickens will come home to roost, so to speak.

by IT GUY | 10th Jun 24, 6:31pm 1718001064

No surprise as draftsmen and architects reduced staff way back...

by HouseMouse | 10th Jun 24, 7:30pm 1718004655

Exactly. They offer the first signals of a looming construction slump

by facepalm | 10th Jun 24, 7:04pm 1718003059

Question..

"+111,100 immigrants arrived here in that time, net of those leaving. And the labour force rose by +69,100 in the same year"

Apologies for the ignorance but does this mean we have imported 69,100 workers, and 42,00 kids, students, and senior citizens?

If so, that seems live a below average trade on behalf of NZ?

by dumbthoughts | 10th Jun 24, 7:55pm 1718006144

It's fine, as these OAPs and little kids don't ever get sick and go to hospital or the doctor, and don't live in houses so they definitely don't lead to increased housing demand, or anything like that right?

by solardb | 10th Jun 24, 8:02pm 1718006571

Some of the allegations about the TPM census debacle are not making sense. One that got my attention was the photocopying of forms claim. What form would they photocopy, and what info on a census form would be of any use? And photocopying, what could be a more time consuming process , writing it out by hand???

by Roger the dodger | 10th Jun 24, 8:11pm 1718007075

If you are looking for logic in what TPM do or say, well, you are expecting far too much.

by Foxglove. | 10th Jun 24, 9:08pm 1718010490

well perhaps because, unlike a screenshot, a simple photocopied document from a photocopier, whatever it might be, does not leave an electronic trail.

by solardb | 10th Jun 24, 9:59pm 1718013556

But the info( still unsure what census data is useful to a political candiate), still has to be loaded into some program or database to be useful.

by TronMVP | 10th Jun 24, 10:07pm 1718014039

I'm guessing that the data on ethnicity may be useful to TPM. They could then target those who could be swayed to vote for TPM.

by the Joneses | 11th Jun 24, 5:38am 1718041132

That is a pretty long bow your drawing. That someone had the census data on a PC in the first place, and that they were concerned that forensic computer investigations might occur into their illegal activities, so made the choice to use a photocopier instead.

As an aside, photocopied pages can leave a trail back to the printer. https://en.m.wikipedia.org/wiki/Machine_Identification_Code

by Kate | 10th Jun 24, 8:03pm 1718006629

The Treasury has also released their visualisation of the Budget 2024 which you can find here.

Big kudos to TSY - always find the visualisation a quick and easy tool to get answers to budget expenditure questions - and great to see a facility to provide feedback in this version as well.

by rastus1 | 11th Jun 24, 9:01am 1718053273

Impressive alright.